This paper develops the first evidence on how individuals’ union membership status affects their net fiscal impact, the difference between taxes they pay and cost of public benefits they receive, enriching our understanding of how labor relations interacts with public economics. Current Population Survey data between 1994 and 2015 in pooled cross-sections and individual first-difference models yield evidence that union membership has a positive net fiscal impact through the worker-level channels studied.
I study job lock and job push, the twin phenomena believed to be caused by employment-contingent health insurance (ECHI). Using variation in Medicaid eligibility among household members of male workers as a proxy for shifts in workers’ dependence on employment for health insurance, I estimate large job lock and job push effects. For married workers, Medicaid eligibility for one household member results in an increase in the likelihood of a voluntary job exit over a four-month period by approximately 34%. For job push, the transition rate into jobs with ECHI among all workers falls on average by 26%.
The hypothesis that active community involvement is beneficial for health finds strong support in the medical literature and in most policy guidelines for active ageing in OECD countries. We test it empirically and find that voluntary work has a significant impact on several measures of mental wellbeing. When accounting for fixed effects, panel attrition, endogeneity, and reverse causality, the positive effect of voluntary work remains robust. For the first time in the literature, we calculate the monetary equivalent of mental wellbeing benefits of voluntary work with the compensating variation approach, and estimate them up to a maximum of around 9,500 euros per indicator. Our results imply that policies fostering voluntary work of the elderly would contribute to active ageing and the wellbeing of the elderly and reduce welfare costs for society.
Social Security eligibility begins at age 62, and approximately one third of Americans immediately claim at that age. We examine whether age 62 is associated with a discontinuous change in aggregate mortality, a key measure of population health. Using mortality data that covers the entire U.S. population and includes exact dates of birth and death, we document a robust two percent increase in male mortality immediately after age 62. The change in female mortality is smaller and imprecisely estimated. Additional analysis suggests that the increase in male mortality is connected to retirement from the labor force and associated lifestyle changes.
Lost in the cacophony of debate surrounding Obamacare “repeal-and-replace” legislation, the Congressional Budget Office (CBO) in October released an updated analysis of illustrative proposals to create a premium support program for Medicare. The report explained how and why premium support could save even more money than CBO had estimated just a few years ago.
As we have long insisted, America’s health care system consists of the worst of both worlds. It amounts to socialism for the beneficiaries, which generates uncontainable demand via third-party paid, cost-averaged pricing; and crony capitalism for the providers, where delivery system cartels of doctors, hospitals, nursing homes, pharma suppliers, medical device makers etc. have implanted themselves deep on K-street and have thereby rigged reimbursement systems for maximum private revenue gain (and minimum system efficiency and competitive discipline).
Determining how to value net government obligations is a long-standing and fundamental question in public finance. Its answer is critical to cost-benefit analysis, the assessment of fiscal sustainability, generational accounting, and other economic issues. This paper posits and simulates a ten-period overlapping generations model with aggregate shocks to price safe and risky government net obligations, including options. Agents can’t trade with future generations to hedge the model’s productivity and depreciation shocks. Nor can they invest in anything other than one-period bonds and risky capital. Our results are surprising. We find that the pricing of short- as well as long-dated riskless obligations is anchored to the prevailing one-period risk-free return. More surprising, the prices of obligations whose values are proportional to the prevailing wage (e.g., Social Security benefits under a pay-go system with a fixed tax rate) are essentially identical to those of safe obligations, i.e., there is little risk adjustment. This is true notwithstanding our assumption of very large macro shocks. In contrast, government obligations provided in the form of options entail significant risk adjustment. We also show that the value of obligations to unborn generations depends on the nature of the compensating variation. Another finding is that the one-period bond market matters, but less than expected, to valuing obligations. Finally, our model lets us test the ability of arbitrage pricing to get prices right. Surprisingly, with the right specification, it comes close. Although highly stylized, our model suggests the potential of detailed, largescale CGE OLG models to price government obligations as well as non-marketed private securities in the presence of incomplete markets and macro shocks.